Chapter 8: The Internal Environment

Transcription

1 Chapter 8: The Internal Environment Key Revision Points The Internal Functions of Commercial Organisations In competitive business environments, customers are at the centre of all of an organisation's activities. In a typical organisation, the activities of a number of functional departments have direct and indirect impacts on customers: Personnel plans. The selection, training motivation and control of staff cannot be considered in isolation from marketing objectives and strategies. Production managers may have a different outlook compared to marketing managers. The actions of finance managers frequently have direct or indirect impact on marketing plans. Ultimately, finance managers assume responsibility for the allocation of funds which are needed to implement a marketing plan. All of these departments should "think customer" and work together to satisfy customer needs and expectations. Bases for Organising a Commercial Organization Four basic approaches to allocating management responsibilities within an organisation are discussed. Organisation based on functional responsibilities In most commercial organisations, a number of core functions can be identified, the most typical being operations, marketing, personnel and finance. The main advantage of allocating responsibilities by functions is that it allows individuals and groups of individuals to develop expertise in their functional area. Against these advantages, most seriously, there can be a tendency for corporate goals to become secondary to functional managers' much narrower functional goals. Functions should be seen as a means to an end, and should not come to be seen as ends in their own right. Management by product type This form of organisation does not replace the functional organisation, but provides an additional layer of management which co-ordinates the functions' activities. A product management organisation structure offers an integrated cost-effective approach to planning. The product manager can in theory react more quickly to changes in the product's business environment than would be the case if no-one had specific responsibility for the product.

2 Against this, a product manager is given a lot of responsibility for ensuring that objectives are met, but relatively little control over resource inputs which they have at their disposal. Confusion can arise in the minds of staff within an organisation as to whom they are accountable to for their day to day actions. Product management structures can lead to larger numbers of people being employed, resulting in a higher cost structure. Market management organisation Market managers can be appointed to oversee the development of particular markets, in much the same way as a product manager oversees particular products. The main advantage of this form of organisation is that it allows management efforts to be focused on meeting the needs of distinct and identified groups of customers. Many of the disadvantages of the product management organisation are also shared by market based structures. There can again be a conflict between responsibility and authority and this form of structure can also become expensive to operate. Organization based on geographical responsibilities Organisations providing goods and services to national or international markets frequently organise many of their functions on a geographical basis. Integrated approaches Overall, the management structure of an organisation must allow for a flexible and adaptable response to customers' needs within a changing environment, while aiming to reduce the level of confusion, ambiguity and cost inherent in some structures. Matrix approach to management The essence of a matrix type of organisation is to allow individuals to concentrate on a functional, product, market or geographical specialisation and to bring them together in task force teams to solve problems taking an organisational view rather than their own narrow specialist view. The most important advantages of matrix structures are that they can allow organisations to respond rapidly to environmental change. The flexibility of matrix structures can be increased by bringing temporary workers into the structure on a contract basis as and when needed. Against this, matrix type structures can be associated with confused lines of authority. Staff may be reluctant to act outside a role which they have traditionally defined narrowly and guarded jealously. Matrix structures invariably result in more managers being employed within an organization. Business Process Re-engineering The underlying principle of business process re-engineering is to design an organisation around key value adding activities. Essentially, re-engineering is about

3 radically redesigning the processes by which an organisation does business in order that it can achieve major savings in cost, or improvements in output, or both. Improving Organizational Effectiveness Numerous studies have sought to identify those factors within organisations which result in an organisation being able to address environmental change more effectively. The McKinsey 7S framework identified seven essential elements for a successful business. Organisational Culture Organisational culture concerns the social and behavioural manifestation of a whole set of values which are shared by members of the organisation and can be defined as "some underlying structure of meaning that persists over time, constraining people's perception, interpretation and behaviour". There are often many visible manifestations of these deep seated cultural values, including the type of buildings occupied by the organisation and the image projected in its publicity and public relations. Handy identified four types of organisational culture: The power culture The role culture The task culture The person culture As individual organisations develop, it is essential that the dominant culture adapts. The Flexible Organization Having the right staff in the right place at the right time can demand a lot of flexibility on the part of employees. Too often, customers are delayed because, although staff are available, they are not trained to perform the task which currently needs performing urgently. To improve their flexibility, many organizations have sought to develop employees' multiple skills. A flexible work force sounds attractive in principle, but there are some drawbacks. Training in multiple skills would appear to be against the principles of scientific management. Recruiting staff may become more expensive, requiring staff to work flexible hours may make their working conditions less attractive than a job where they had certainty over the days and times that they will be working. Leadership Many of the most successful commercial organisations, attribute their success in part to the quality of leadership within their organisations. The results of poor leadership are evident in many failing organisations. There have been many suggestions of desirable leadership characteristics, including: setting clear expectations of staff

4 recognising excellence appropriately and facilitating staff in overcoming their weaknesses leading by example being able to empathise with employees showing adaptability to changing circumstances Defining the Organizational Mission A corporate mission statement is a means of reminding everybody within the organisation of its essential purpose. Drucker (1973) identified a number of basic questions which form the basis of a corporate mission statement: what is our business? who is the customer? what is value to the customer? what will our business be? what should our business be? An organisation's mission statement is a reflection of a number of factors: The organisation's ownership The previous history of the organisation Environmental factors, in particular, the major opportunities and threats Creating Involvement by Employees It can be difficult for an organisation to respond to environmental change if it doesn t have the confidence of its employees, for whom change may be viewed with suspicion. The following sections review some key elements of the employment relationship which can facilitate this. Motivating employees Motivation concerns the choices which employees make between alternative forms of behaviour in order that they as employees attain their own personal goals. The task of management is to equate the individual's personal goals with those of the employing organisation - that is, getting employees morally involved with the service which they help to produce. Consent The term consent covers a variety of management led initiatives and strategies which seek to give it authority without actively emphasising its coercive power. Scientific management approaches seek co-operation between employer and employee in terms of the division of labour, whereby individual employees work in pre-defined ways as directed by management. Paternalism is often associated with Quaker employers such as Cadbury or Rowntree who attempted to show that they were interested in their workforce at home as well as at work. The human relations approach looks at man as a social animal. Mayo emphasized the importance of atmosphere and social attitudes, group feelings and the sense of identification which employees had. Participation

5 Participation may manifest itself through more qualitative measures such as employee involvement in decision making through quality circles or team briefings. The process of creating involvement can take the form of devolution of some areas of traditional personnel activity to line management. Communication In good practice organisations, information can be communicated through a number of channels. The staff newsletter is a well tried medium, but in many instances these are seen as being too little, too late and with inadequate discussion of the issues involved. Many organisations use team briefings to cascade information down through an organisation and to communicate back upwards again. The Internet is developing new possibilities for communicating information. Strategies to increase employees involvement This section considers various strategies to increase employees' involvement. "Open door" policies Team Briefings a Quality Circles (QCs) Total Quality Management (TQM) policies The pattern of ownership of an organisation can influence the level of consent and participation. Training and Development Training refers to the acquisition of specific knowledge and skills which enable employees to perform their job effectively. In contrast to this, staff development concerns activities which are directed to the future needs of the employee, which may themselves be derived from the future needs of the organisation. Training is essential if any process of change is to be actively consented to by the workforce. Rewarding Staff Rewards to employees can be divided into two categories - non-monetary and monetary. Non-monetary rewards cover a wide range of benefits, some of which will be a formal part of the reward system, for example subsidised housing or sports facilities and public recognition for work achievement. Monetary rewards are a more direct method of improving the performance of employees. A number of methods are commonly used by organisations to reward employees financially: Controlling and Empowering Staff There are two basic approaches to managing people. On the one hand, staff can be controlled through close supervision and corrective action taken where they fail to perform to standard. On the other hand, staff can be made responsible for controlling their own actions. The latter is often referred to as "empowering"

6 employees. Empowerment essentially involves giving employees discretion over the way they carry out their tasks. Internal Marketing Much debate surrounds just how Internal Marketing fits within traditional Human Resource Management structures and processes. Viewed as an activity in isolation, internal marketing is unlikely to succeed. For that to happen, the full support of top management is required. Internal exchange relationships Every organisation can be considered to be a market place consisting of a diverse group of employees who engage in exchanges between each other. Increasingly, organisations are asking internal service departments, such as information technology, human resources, accounting, and media services, to be more accountable. This has resulted in employees effectively trading services with other employees within their organisation. This idea of a value chain and internal trading of services is closely related to the idea developed in the total quality management literature of "Next operation as a customer" (NOAC). Industrial Relations There is great variety in the manner in which management negotiates employment conditions with their workforces. For organisations employing large numbers of staff, much of the employment relationship has traditionally been conducted collectively between the employer and groups of employees. The Internal Environment of Public Sector Organizations The degree of discretion given to a public sector marketing manager is usually less than that given to a counterpart in the private sector. The degree of discretion given to a public sector manager is usually less than that given to a counterpart in the private sector. The degree of discretion given to a public sector.